Percent of Percent of
Total Total
Employer Employees Employment Rank Employees Employment Rank Apple Valley Post Acute Rehab 177 4.66% 1 N/A N/A N/A
Sonoma Specialty Hospital 172 4.53% 2 N/A N/A N/A
Traditional Medicinals 132 3.47% 3 N/A N/A N/A
Safeway 114 3.00% 4 N/A N/A N/A
Whole Foods Market 97 2.55% 5 N/A N/A N/A
TLC Child and Family Services 93 2.45% 6 N/A N/A N/A
West Sonoma County Union High 92 2.42% 7 N/A N/A N/A
City of Sebastopol 90.5 2.38% 8 N/A N/A N/A
Gravenstein Union District 82 2.16% 9 N/A N/A N/A
Sebastopol Hardware Center 70 1.84% 10 N/A N/A N/A
1,120 29.46%
Source: MuniServices, LLC/Avenu Insights & Analytics
CITY OF SEBASTOPOL
PRINCIPAL EMPLOYERS
CURRENT YEAR AND NINE YEARS AGO
Fiscal Year 2023 Fiscal Year 2014
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City Council Meeting Packet of March 5, 2024
2017 2018 2019 2020 2021 2022 2023
Governmental Activities
General Government
City Council 6.00 6.00 6.00 5.00 6.00 6.00 6.00
City Manager 0.75 0.75 0.75 0.75 0.75 0.75 0.75
City Attorney 0.25 0.25 0.25 0.25 0.25 0.25 0.25
City Clerk 1.00 1.00 1.00 1.00 1.00 1.00 1.00
Finance 4.00 4.00 4.00 4.00 4.00 4.00 4.00
Building Inspection 1.50 1.50 1.50 0.50 1.50 0.50 0.50
Planning 3.00 3.00 3.00 3.00 3.00 3.00 3.00
Public Safety
Police 34.75 34.75 34.75 24.75 25.75 23.00 25.00
Fire 33.50 33.50 35.50 34.50 35.50 35.50 34.50
Public Works and facilities
Administration 2.75 2.75 2.75 2.75 2.75 2.75 2.75
Water 1.00 1.00 1.00 1.00 1.00 1.00 1.00
Laborer 4.00 4.00 4.00 3.00 3.00 3.00 3.00
Engineering 1.75 1.75 1.75 1.75 1.75 1.75 1.75
Maintenance 4.00 6.00 6.00 7.00 7.00 7.00 7.00
Total 98.25 100.25 102.25 89.25 93.25 89.50 90.50
* The schedule is intended to show information for ten years, additional years will be displayed as it becomes available.
Source: City of Sebastopol Finance Department
CITY OF SEBASTOPOL
FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES
BY FUNCTION/PROGRAM
LAST TEN FISCAL YEARS*
Fiscal Year
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2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Building
Residential Building Permits n/a 302 432 393 278 300 290 323 330 360 Land use entitlement applications n/a 54 32 25 25 25 25 25 30 57 Police
Citations issued n/a n/a n/a 872 1,156 906 2,121 1,122 1,224 1,177 Arrests made n/a 823 623 669 581 519 468 329 299 297
Requests for services n/a 7,801 7,830 7,703 7,845 8,276 8,251 6,894 7,743 12,384 Fire
Fire responses 1,055 1,071 1,056 1,150 1,190 1,275 1,200 1,189 1,250 1,325 Fire Inspections 200 200 300 350 375 400 380 375 390 280 Area served (sq. miles) 1.20 1.20 1.20 1.20 1.20 1.20 1.20 1.20 1.20 1.20 Public Works
Encroachment permits 93 117 98 59 65 74 86 95 60 61
Capital improvement projects n/a n/a n/a n/a 6 3 3 6 1 2 Park acres overseen 96.00 96.00 96.00 97.70 97.70 97.70 97.70 97.70 97.70 98.70 Street maintenance - crack seal (streets) n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a Street maintenance - traffic marking
paint (gal.) n/a n/a n/a n/a 271 325 120 135 275 120
Street light repairs n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a Water/Waste Water
Active Residential Accounts n/a 2,550 2,470 2,682 2,503 2,451 2,686 2,560 2,506 2,767 Active Commerical Accounts n/a 477 335 473 381 455 343 335 364 379 Average Daily Water Consumption n/a 758,904 783,561 838,673 821,096 782,192 817,534 872,883 732,960 718,416 Ground Storage Capacity (gallons) n/a $7.5m $7.5m $7.5m $7.5m $7.5m 7.5m 7.5m 7.5m 7.5m Elevated Storage Capactiy (gallons) n/a
0- no
elevated
tanks
0 - no
elevated
tanks
0 - no
elevated
tanks
0 - no
elevated
tanks
0 - no
elevated
tanks
0 - no
elevated
tanks
0 - no
elevated
tanks
0 - no
elevated
tanks
0 - no
elevated
tanks
Ground Water Production Capactiy
(1000 gallons per day) n/a 3,226 3,226 3,226 3,226 3,312 3,312 3,312 3,312 3,312,000 Pump Capacity (gallons per minute) n/a 2,240 2,240 2,240 2,240 2,300 2,300 2,300 2,300 2,300 Waste Water Treatment Capacity
(1000 gallons per day) n/a 840 840 840 840 840 840 840 840 840,000 Source: City of Sebastopol Finance Department
Fiscal Year
CITY OF SEBASTOPOL
OPERATING INDICATORS
BY FUNCTION/PROGRAM
LAST TEN FISCAL YEARS
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2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Police
Stations 1 1 1 1 1 1 1 1 1 1
Fire
Stations 1 1 1 1 1 1 1 1 1 1
Public Works
Streets (centerline miles) n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a Street lights n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
Traffic signals 2 2 2 2 2 2 2 2 2 2
Parks and Recreation
Office buildings 4 4 4 4 4 4 4 4 4 4
Park acreage 96 96 96 97.7 97.7 97.7 97.7 97.7 97.7 97.7 Playing fields/courts n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a Swimming pools 1 1 1 1 1 1 1 1 1 1
Water play features n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a Water
Water mains (miles) 37 37 37 37 37 37 37 37 37 37
Fire hydrants n/a n/a 450 450 450 450 450 450 45 450
Storage capacity (million gallons) 7.50 7.50 7.50 7.50 7.50 7.50 7.5 7.5 7.5 7.5 Treatment capacity (million gallons)
Wastewater
Sewer mains (miles) 29 29 29 29 29 29 29 29 29 29
Treatment capacity (million gallons) n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a Source: City of Sebastopol Finance Department
CITY OF SEBASTOPOL
CAPITAL ASSET STATISTICS
BY FUNCTION/PROGRAM
LAST TEN FISCAL YEARS
Fiscal Year
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City of
Sebastopol
Sebastopol, California
Auditors’ Communication With Those
Charged With Governance
For the year ended June 30, 2023
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of March 5, 2024
To the Honorable Mayor and Members of the City Council
of the City of Sebastopol
Sebastopol, California
We have audited the financial statements of the City of Sebastopol (City) as of and for the years ended June 30, 2023, and have issued our report thereon dated December 29, 2023. Professional standards require that we advise you of the following matters relating to our audit.
Our Responsibility in Relation to the Financial Statement Audit As communicated in our engagement letter, our responsibility, as described by professional standards, is to form and express an opinion(s) about whether the financial statements that have been prepared by management with your oversight are presented fairly, in all material respects, in accordance with accounting principles generally accepted in the United States of America. Our audit of the financial statements does not relieve you or management of your respective responsibilities.
Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain reasonable, rather than absolute, assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting. Accordingly, as part of our audit, we considered the internal control of the City solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control.
We are also responsible for communicating significant matters related to the audit that are, in our professional judgment, relevant to your responsibilities in overseeing the financial reporting process.
However, we are not required to design procedures for the purpose of identifying other matters to communicate to you.
Planned Scope and Timing of the Audit
We conducted our audit consistent with the planned scope and timing we previously communicated to you.
Compliance with All Ethics Requirements Regarding Independence The engagement team, others in our firm, as appropriate, our firm, and our network firms have complied with all relevant ethical requirements regarding independence.
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of March 5, 2024
To the Honorable Mayor and Members of the City Council
of the City of Sebastopol
Sebastopol, California
Significant Risks Identified
We have identified the following significant risks:
Risk of management override of internal controls – A risk of management override of internal controls exists at any entity where management can change or decide not to perform that entity’s internal controls.
Revenue recognition risk – Errors in revenue recognition can affect bond covenant ratios and the net position of the City.
Qualitative Aspects of the Entity’s Significant Accounting Practices Significant Accounting Policies
Management has the responsibility to select and use appropriate accounting policies. A summary of the significant accounting policies adopted by the City is included in Note 1 to the financial statements.
There have been no initial selection of accounting policies and no changes in significant accounting policies or their application during the fiscal year ended June 30, 2023. No matters have come to our attention that would require us, under professional standards, to inform you about (1) the methods used to account for significant unusual transactions and (2) the effect of significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus.
Significant Accounting Estimates
Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s current judgments. Those judgments are normally based on knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ markedly from management’s current judgments.
The most sensitive accounting estimates affecting the financial statements are capital asset depreciation and useful life, and the pension plan and OPEB plan assumptions.
Management’s estimate of capital assets depreciation and useful life and the pension plan and OPEB plan assumptions are based on historical useful lives of such assets, and actuarial assumptions, respectively. We evaluated the key factors and assumptions used to develop the estimate of capital assets depreciation and useful life, and the pension plan and OPEB plan assumptions and determined that they are reasonable in relation to the basic financial statements taken as a whole and in relation to the applicable opinion units.
Financial Statement Disclosures
Certain financial statement disclosures involve significant judgment and are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting the City’s financial statements relate to:
Summary of Significant Accounting Policies
Cash and Investments
Capital Assets
Long-Term Debt
Pension Plans
Other Postemployment Health Care Benefits
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of March 5, 2024
To the Honorable Mayor and Members of the City Council
of the City of Sebastopol
Sebastopol, California
Significant Difficulties Encountered during the Audit
We encountered no significant difficulties in dealing with management relating to the performance of the audit.
Uncorrected and Corrected Misstatements
For purposes of this communication, professional standards also require us to accumulate all known and likely misstatements identified during the audit, other than those that we believe are trivial, and communicate them to the appropriate level of management. Further, professional standards require us to also communicate the effect of uncorrected misstatements related to prior periods on the relevant classes of transactions, account balances or disclosures, and the financial statements as a whole and each applicable opinion unit. Management has corrected all such misstatements.
In addition, professional standards require us to communicate to you all material, corrected misstatements that were brought to the attention of management as a result of our audit procedures.
None of the misstatements identified by us as a result of our audit procedures and corrected by management were material, either individually or in the aggregate, to the financial statements taken as a whole or applicable opinion units.
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter, which could be significant to the City’s financial statements or the auditor’s report. No such disagreements arose during the course of the audit.
Representations Requested from Management
We have requested certain written representations from management, which are included in the letter dated December 29, 2023.
Management’s Consultations with Other Accountants
In some cases, management may decide to consult with other accountants about auditing and accounting matters. Management informed us that, and to our knowledge, there were no consultations with other accountants regarding auditing and accounting matters.
Agenda Item Number 5
Agenda Item Number 5
City Council Meeting Packet of March 5, 2024
To the Honorable Mayor and Members of the City Council
of the City of Sebastopol
Sebastopol, California
Other Significant Matters, Findings, or Issues
In the normal course of our professional association with the City, we generally discuss a variety of matters, including the application of accounting principles and auditing standards, significant events or transactions that occurred during the year, operating and regulatory conditions affecting the entity, and operational plans and strategies that may affect the risks of material misstatement. None of the matters discussed resulted in a condition to our retention as the City’s auditors.
Other Information Included in the Basic Financial Statement We applied certain limited procedures to management’s discussion and analysis, pension plans and budgetary comparison information (for the general fund and major special revenue funds), which are required supplementary information (RSI) that supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the RSI and do not express an opinion or provide any assurance on the RSI.
We were engaged to report on budgetary comparison information (excluding the general fund and major special revenue funds) and combining schedules, which accompany the financial statements but are not RSI. With respect to this supplementary information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves.
This report is intended solely for the information and use of the City Council and management of the City and is not intended to be and should not be used by anyone other than these specified parties.
Badawi & Associates, CPAs
Berkeley, California
December 29, 2023
Agenda Item Number 5
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City Council Meeting Packet of March 5, 2024
City of Sebastopol
Presentation to the City Council
March 5, 2024
Presented by: Mitesh Desai, CPA
Principal
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2 Agenda
Deliverables and Scope of the Audit
Areas of Primary Emphasis
Auditor’s Report and Financial Statements
Required Communications
Conclusion & Discussion/Questions
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City Council Meeting Packet of March 5, 2024
3 Deliverables and Scope of the Audit
Independent Auditor’s Report on the City of Sebastopol’s Basic Financial Statements (BFS).
Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters.
Agreed-Upon Procedures on Appropriation Limit Schedule
Communications With Those Charged With Governance.
Letter used to summarize communication of various significant matters to those charged with governance.
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4 Areas of Primary Audit Risk
The risk of management override of controls is addressed by the following procedures:
Assignment of audit staff based on consideration of audit risk.
Procedures to incorporate an element of unpredictability in the audit from period to period.
Consideration of the selection and application of significant accounting principles.
Examination of journal entries.
Review of accounting estimates for bias.
Evaluation of business rationale for unusual transactions.
Evaluation of the appropriateness of fraud-related inquiries performed.
Revenues & Receivables (Property Taxes, Sales Taxes, etc.): Improper revenue recognitions Governmental Funds: Confirm/validate property taxes & other significant revenues/receivables.
Proprietary Funds: Performed analytical procedures over revenues and receivables Pension and OPEB:
Reviewed management’s journal entries for GASB 68 and GASB 75.
Reconciled amounts recorded to reports provided by CalPERS and City’s Actuary.
Tested the census data used by CalPERS and City’s Actuary.
Obtained reports from CalPERS auditor’s plan information for pension.
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City Council Meeting Packet of March 5, 2024
5 Auditor’s Report (Pages 1 to 3)
Unmodified opinion on the basic financial statements
Audit performed in accordance with Generally Accepted
Auditing Standards and Government Auditing Standards
Financial statements are fairly presented in all material respects Significant accounting policies have been consistently applied Estimates are reasonable
Disclosures are properly reflected in the financial statements Agenda Item Number 5
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6 Agenda Item Number 5
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7 Government-Wide Financial Statements
Cash & Inv Receivables (net) Other Assets Capital Assets Deferred outflows 2021 $14,920,161 $2,864,009 $44,563 $17,440,359 $3,225,837 2022 $17,887,137 $3,126,547 $830,161 $18,811,240 $3,374,076 2023 $16,520,531 $3,062,996 $1,025,719 $21,238,893 $6,655,156 $-
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
Assets and Deferred Outflows of Resources (Page 25)
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8 Government-Wide Financial Statements
Accounts
Payable Other Liabilities Net Pension
Liability
Other LongTerm Liabilities Deferred Inflows
2021 $514,092 $501,710 $13,864,877 $6,677,008 $715,638
2022 $1,009,888 $1,221,103 $8,665,009 $10,616,885 $7,662,907 2023 $1,382,875 $841,891 $15,526,113 $9,377,281 $2,000,987 $-
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
$16,000,000
$18,000,000
Liabilities and Deferred Inflows of Resources (Page 25) Agenda Item Number 5
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City Council Meeting Packet of March 5, 2024
9 Government-Wide Financial Statements
2021 2022 2023
Net Cost of Service $9,577,124 $10,856,365 $5,501,029
Tax Revenue $8,927,609 $9,802,494 $10,058,697
$-
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
Net Cost of Service to Tax Revenue (Page 27)
*Net Cost of Service relates only to Governmental Activities Agenda Item Number 5
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City Council Meeting Packet of March 5, 2024
10 General Fund
Expenditure Coverage (Pages 32 and 34)
2021 2022 2023
Unrestricted Fund Balance $ 8,078,173 $ 8,148,928 $ 10,548,490 Total Expenditures $ 10,579,038 $ 11,085,582 $ 11,349,340 Unrestricted Fund Balance as
a % of Total Expenditures 76.36% 73.51% 92.94%
Number of months 9 9 11
Government Finance Officers
Association (GFOA) recommendation No less than 2 months Measure of City's ability to operate with no revenues using available fund balance.
*Includes Measure T and Measure Y General Purpose Sales Tax fund balances and expenditures.
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11 Pension Plan
Net Pension Liability
7.90% $22,801,258
6.90% $15,526,113
5.90% $9,559,887
$-
$2,500,000
$5,000,000
$7,500,000
$10,000,000
$12,500,000
$15,000,000
$17,500,000
$20,000,000
$22,500,000
$25,000,000
City’s CalPERS Pension Plan Sensitivity to Discount Rate (2022 Measurement Date) (Page 73)
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12 Other Postemployment Benefits
Total OPEB Liability
5.09% $1,657,027
4.09% $1,711,562
3.09% $1,777,560
$-
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
$1,800,000
$2,000,000
City’s OPEB Plan Sensitivity to Discount Rate
(2022 Measurement Date) (Page 75)
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13 Agenda Item Number 5
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14 Required Communications
Our Responsibility Under
U.S. GAAS
• Opinion on whether financial
statements are fairly stated in
accordance with U.S. GAAP
• Evaluate internal control over
financial reporting including
tone at the top
• Evaluate compliance with laws,
contract and grants
• Ensure financial statements are
clear and transparent
• Communicate with the
governing body
Management Responsibility
• Management is responsible for the
financial statements
• Establish and maintain internal
control over financial reporting
• Making all financial records available
to us
• Establish internal control to prevent
and detect fraud
• Inform us of all known and suspected
fraud
• Comply with laws and regulations
• Take corrective action on audit
findings
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15 Required Communications
Independence
Timing of the Audit
Management Judgment
and Accounting Estimates
It is our responsibility to maintain
independence. We maintain our
independence by strict adherence to the
AICPA and the Board of Accountancy rules
Within the time frame communicated to the
City in our engagement letters
• Depreciation expense and related
accumulated depreciation
• Defined benefit plan (actuarial
assumptions)
• OPEB plan (actuarial assumptions)
Representations Requested
of Management
We obtained representations from management
prior to issuance of our reports.
Material Uncertainties
Related to Events and
Conditions
There were no material uncertainties related
to events and conditions.
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City Council Meeting Packet of March 5, 2024
16 Required Communications
None
Significant Audit Adjustments
and Unadjusted Differences
Considered by Management
to be Immaterial
Deficiencies in Internal Control
over Financial Reporting
Potential Effect on the Financial
Statements of Any Significant
Risks and Exposures
Fraud and Illegal Acts
None.
No Material Weaknesses.
No significant risks or exposures
were identified. Legal matters and
potential liabilities are disclosed in
the financial statements.
None
Difficulties Encountered in
Performing the Audit
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17 Questions
Mitesh Desai
[email protected]
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18 Thank You
For Allowing Us to Provide Audit
Services to the City of Sebastopol
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